Asia Pacific: McDonald’s sales hit with China, affected markets

In July, the company’s comparable sales in Asia Pacific, Middle East, Africa (APMEA) decreased 7.3% reflecting the impact of food quality and safety issues at a supplier to McDonald’s and other food companies in China.

As a consequence, results in China, Japan and certain other markets experienced a significant negative impact.

The affected markets represent approximately 10% of global systemwide sales and negatively impacted the segment’s July comparable sales by more than 700 basis points.

In the Form 8-K dated July 22, 2014, the Company indicated that full year 2014 global comparable sales were expected to be relatively similar to year-to-date June performance (i.e. relatively flat) given a stagnant IEO category, sustained competitive activity, consumer price sensitivity and cost pressures.

However, as a result of the China supplier issue, the company’s global comparable sales forecast for 2014 is now at risk.

During the month, the US featured core favorites in conjunction with McDonald’s global World Cup sponsorship and promoted premium beef and chicken options as the segment lapped a prior year Monopoly event.

Meanwhile, Europe’s comparable sales rose 0.5% in July led by positive performance in France and the UK, partly offset by negative performance in Germany and Russia.

Systemwide sales for the month decreased 0.5%, or 0.0% in constant currencies.